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Cliffs, Abyss and Myopic Economy

I have always been fascinated by catchy phrases coined by
the intellects and the media. And thus, its no surprise I discovered the word FISCAL
CLIFF very intriguing. I would rather like to reveal that these are
desperate times with socializing opportunities curtailed by extreme cold, so I
have resorted to, what you may call intellectual enlightenment. As
a part of this scheme I have started reading ET (The Economic Times) in
hope that it might help me develop a financial outlook and satisfy my urges for
statistical analysis which are terribly frequent these. So, ET, in recent past,
was plagued by this phrase Fiscal Cliff, so it quite natural to
develop certain amount curiosity about it for any person even if he is not as
inquisitive as me. Moreover, the enigma of the phrase is overemphasized by the
height of urgency exhibited by US Congress in attending to it. I admit I was
mesmerized by Senate's dedication as they sacrificed their New Year Eve to come
up with a solution, however, this short-lived illusion terminated as I soon
realised the problem prevailed for 3 long years and was tackled few hours
before the deadline which just dramatized the issue. Eventually, I drew the
conclusion that US politicians are similar to Indians only that they address
the matter somehow, in the end, which we Indians don't?

One of the several cartoons that recently flooded the social media

Here, I will present a very simple explanation on what this
fiscal cliff was and why it needed to be tackled and what possible outcomes it
could lead to. Formally stating,

Fiscal cliff is a conundrum encountered by US when there
was a drastic decline in budget deficit or in other words tremendous increment in fiscal
revenue.

Now, first of all let me tell you what fiscal is?
Fiscal is anything pertaining to public money. So, you may guess fiscal deficit
is loss of govt. money and fiscal revenue by similar understanding is a gain of
money by govt. So, with this explanation you may get deluded that fiscal cliff
is favourable phenomenon. Here I become more specific with the use of term fiscal; a fiscal transaction doesn't
involve asset generation, movement or dissolution, so fiscal revenue is
generally based on taxes and expenditure cuts. And problem with this is,
expenditure cuts reduce the amount money govt. is sending in the economy, which
in turn reduces the productivity at the same time increased taxes curtails
purchasing power which in turn curbs the demand. With reduced demand and
productivity, we have a reduced GDP (production).
It was estimated that this fiscal cliff may lead to a decrement of 4%
in US's GDP in a year only. If you
are wondering what the outcomes of fall in GDP are, it is recession in economy and I believe recession has in recent past become a part of every other
vernacular with most of us aware of its implications.

If you are wondering what led to such situation; the answer
is simple. It is the myopic economic vision prevalent these days. The notion
that we have prevailed somehow, we will prevail somehow will
someday have ghastly consequences on global economy. The above scenario was an
outcome of short-sighted policy where a close to debt ceiling economy tries to
make up for its debt crisis by increasing its revenue at the cost of economy's
progress. Even now the solution is naive as US govt. has increased the
expenditure which implies, sometime in future, USA will again reach the debt
ceiling. Thus, there is a pressing need for a long-lasting solution.

For India, it is a high time to draw lessons from other's
failures and seek a sustainable solution for the eternal deficit problem which can
aptly be termed as fiscal abyss (I so desperately want to be the one who has coined the term).
This solution should be progressive from economic point of view and should
address to the issues of all sections of society. And thus overtaxing
the super-rich is not at all a solution we should adhere to?

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About Me

I believe nothing is definitive and thus, I can't really describe how I am. In actuality, how I am to X will certainly differ from how I am to Y. However, due to concurrence of opinion a majority of such X and Ys (my friends) I am forced to believe that I do possess certain traits which is witnessed by most of them. It is indisputable that I am more serious than I should be.
I am dogmatic(they all say and I always disagree, which eventually confirms their acquisition). I am weird and boring(disputable). However everything mentioned can be false as well. It depends on how much you know me..and frankly speaking you never know enough.
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